Bill Announcement

What is Bill Announcement?

Bill announcements are published by the U.S. Treasury to announce the terms of the next bill auction and must contain the date and time of the auction, as well as the amount of bills to be tendered.

Understanding Bill Announcement

A bill announcement is released several days before a bill auction to kick-start the process. A bill auction is a public auction for Treasury bills that is held weekly by the U.S. Treasury. This is the manner in which all U.S. Treasury bills are issued. As of 2020, there are 24 authorized primary dealers that are required to bid directly upon each issue. A primary dealer is a pre-approved bank, broker-dealer or other financial institution that is able to make business deals with the U.S. Federal Reserve, such as underwriting new government debt.

The announcement includes information such as the auction date, issue date, amount of security that will be sold, bidding close times, participation eligibility and more. All auctions are open to the public through Treasury Direct or the Treasury Automated Auction Processing System (TAAPS). Treasury Direct is the online platform through which investors can purchase federal government securities directly from the U.S. Treasury. TAAPS is a computer network system developed by the Federal Reserve Bank to process bids and tenders received for Treasury securities.

Bill announcements must also post the settlement date of the bills, as well as the date of their maturity, CUSIP number and the minimum bid amount, in millions. Bill announcements are published weekly, corresponding with the next auction. The terms outlined in each announcement provide an indication of the demand for Treasury bills.

Bill Auction Participants

Participants in any Treasury auction consist of small investors and institutional investors who submit bids categorized as either competitive or non-competitive tenders. Non-competitive tenders are submitted by smaller investors who are guaranteed to receive bills, but they will not know what discount rate they will receive until the auction closes. In effect, these investors receive no guarantee on the price or discount received.

An investor who submits a non-competitive bid agrees to accept whatever discount rate is decided at the auction, determined by the competitive side of the auction which is handled as a Dutch auction. A Dutch auction is a public offering structure in which the price of the offering is set after taking in all bids to determine the highest price at which the total offering can be sold. The minimum non-competitive tender for a Treasury bill is $10,000. The non-competitive closing time for bills is normally 11:00 a.m. Eastern Time on auction day.